tv Studio 1.0 Bloomberg January 10, 2015 1:30pm-2:01pm EST
>> he's been called the startup whisperer. reid hoffman is the cofounder and executive chairman of linkedin and an investor in some of the most successful companies of all time, including facebook. he wasn't always on track to be an entrepreneur. a student of philosophy, hoffman at one point pursued a career in academia. but he took his first job out of school at apple, and then joined the paypal mafia. now a partner at greylock, hoffman sits on seven boards. he is the author of a new book,
"the alliance." 1.0"uest today on "studio is reid hoffman. thank you for joining us. >> thank you. >> you have no shortage of jobs. why did you write this book? >> in many circumstances, employers and employees are lying to each other. the notion is the modern career is changing. where there are options for shifting companies. there are career tracks that are changing. how do you get that investment in the future, between the employer and the employees. the answer is an alliance. that transforms your career, it makes you employable, and transforms the company. >> you say people should be honest from the start, how honest should they be? >> to give an example of something i learned from one of our executives -- when he's interviewing people, before they joined the company, he asked them what job they want after linkedin. that's part of his interview.
>> so, what do you want to do next after this? >> yes. that's a level of transparency. we are committed to your career. we want your stint here to be transformative for your career -- career. >> what if you hears something you do not like? >> you ask why? >> what if you hear something you don't like? >> you say, i may think this alliance may not work. >> the comparison to the military -- do people really feel that way about their companies? that patriotic? >> we want people to understand it's not daily employment. it is an investment. it should be transformative. a bold terms should be the right way to think about it. >> what other companies are doing this well? you have your hands in so many of them. >> google, for example. we normally think about these as three to five year stints, or
-- where the person actually learns a job, chief something -- achieves something significant, proves himself, and then goes to do something else. ebay focuses a lot on how to we -- do we bring the relationship of folks who have graduated together. then have the external network tied in. places like ge, in terms of what they do in executive rotation. but also how do you then groom all kinds of stars to be an executive at this huge industrial conglomerate? >> what is silicon valley get -- >> what does silicon valley get that other industry's don't yet? >> silicon valley gets that r&d is not just holing up in a lab and inventing something, and then there it is. it's actually being present and active in the network around innovation. people hold up steve jobs and say he was sit in the back room.
they didn't realize he was talking to people constantly. what could be done here and here? i am interested in learning about this. silicon valley is a combination of intense, competition and intense cooperation. >> linkedin is a paradox. it makes it easy for people to find opportunities, and makes it easy for companies to lose good people. >> when you have a more open and transparent ecosystem, that opportunities,ty the quality companies, the high culture companies will benefit. essentially the talent will flow , to those. but overall, it creates massive benefits for individuals and for the companies that have interesting opportunities. that is a good thing. >> you have a statement of alliance at the end of a book -- the book that people can use as a guide. in the end isn't it just a , promise, and a promise can be broken? >> promises can be broken, just like any relationships. sometimes a friendship ends, it
happens. but if you lived your whole life like friendships may end, so i won't have any friends, that would be terrible. [laughter] >> companies sometimes have a founding myth that boils down into legend. what is the myth of reid hoffman and what is the reality? >> the myth, the reality, who can tell the difference? my myth is a manifest destiny march towards talent, entrepreneurship. but how do we come towards people, how to we help that? oh, look software. , entrepreneurship. as ways of discovering that path. that is the myth and reality. >> let's take a break. we'll be right back. ♪
>> let's talk about how you got there. you grew up in berkeley. >> yup. >> what did your parents do? >> both parents are lawyers. that led to -- the legal profession is the one that people most often leave. when people asked me when i was 12 what i wanted to be, the answer was not a lawyer. [laughter] i didn't actually know what i wanted to be. i kind of got the independent bug a little early. i was going to a school that was on the berkeley-oakland order. it was a college preparatory school. a friend said they were going to a school in vermont. and i said, wait, i could go and be independent. i could be exploring my own life. so i applied for and got into the school without either of my parents knowing. >> you applied to a boarding school without your parents knowing? >> yes. i was kind of the independent streak, which i encountered early. >> what kid were you in high school?
did you fit into one of the boxes anywhere? >> i was a pretty strange individual. [laughter] for example, i usually would have one or two friends in most of the different cliques. i had a friend or two in the jocks, a friend or two in the artists. it was all very individual. i did have much younger -- i was part of a fantasy role-playing group. >> what is that? >> dungeons & dragons. the way i got into dungeons & dragons was my dad, when i was nine, hired a babysitter that introduced me to dungeons & dragons. creating a new world, thinking how stories come together. like an interactive novel. >> you went to stanford. you majored in symbolic systems. marissa mayer also majored in symbolic systems. what is that? >> it is a unique major to stanford. the simple explanation of exceptionscience and -- most do not think it is simple.
it is a step deeper. part of what is transforming the world is this notion of systems assemblage. whether it's computer programs, logic, models of how we think and psychology. i think i was the eighth or ninth person to have that major. >> so while you are at stanford, you met peter thiel. >> yes. >> tell me how you met. >> peter and i had both been told about each other by people we knew. i was told there was this really right-wing person. he was told there was this really left-wing person. we both went, wait a minute, i've heard about you. we grabbed coffee, i think we argued for eight hours. , you can't believe that. we said that was fun, let's do that again. >> you went to oxford and studied philosophy, why? >> i think i'll be an academic. if i'm an academic, i can write about both of these interesting questions. i'm fascinated about how people think and reason. how we communicate. what i realized was that the
course of becoming an academic professor was to be a very narrow scholar. you wanted to be an expert on the thing that only 10 to 20 people in the world knew about. what i wanted to do was how to -- how do you help millions of people? within six months at oxford, i knew that i wasn't going to be an academic. i was going to come back here. >> that is when you decided to be an entrepreneur. >> that is when i started to work on software. i started thinking of myself as an entrepreneur later. chris you took your first job at apple -- >> took your first job at apple, 1994, you dabbled in the near death spiral at apple. did you meet steve jobs? >> no. he was not there at the time. i was at apple -- we had no idea what we were doing. no good plan to adapt during the future. i went there because i loved apple products. i loved the macintosh. i had learned to program on it.
>> then you went on to start your own company. you started a social network before social networks. it was called social net. 1997. >> social net had some of the right ideas. it had the idea of having a profile, the idea of discoverability. it had the idea of having social controls on how you would meet strangers. but it didn't have the fundamental network idea. it didn't have the fundamental real identity idea. >> you went on to the paypal mafia. who called who? how did that happen? >> i called peter, and he said, we are going to sell paypal. we don't have a business model. but it would be really useful for us, because you know all of this stuff. could you come help us organize and sell it? i know all you guys. if i could be helpful, i would be happy to step in and do that. of course, we did end up selling it. we sold to ebay after we took it public. what was posted be a six-month tour of duty -- was supposed to
be a six-month tour of duty turned into a three-year tour of duty. the paypal story is long. >> and legend. what did it start being called -- when did it start being called the mafia? >> i don't really know. it might have been with the fortune article. i am always hesitant about the term. mafia implies dark rooms. extortion. these kinds of things. it's clever, gets repeated. it implies a dense network. where people are really tight with each other. it's much less evocative. the paypal network is what i would call it. it probably started six to 12 months after the ebay acquisition. >> linkedin, tesla, youtube, yelp, yammer, and spacex. all founded by members of the paypal mafia. what was special about all of you? what did you have in common? >> paid how collected whole bunch -- paypal collected a whole bunch of people who were young and intense, and were
entrepreneurial themselves. then they were bought by ebay. so all of these folks were like, what do i do next? chad and steve go and do youtube. elon goes and does tesla and spacex. russ does yelp. i do linkedin. and yet, because we had this intense experience together, we all still have really tight networks. we are calling each other going, i'm thinking about doing this, what do you think? >> who do you call for what? >> for example, macroeconomic financial bold models, i will call peter. the intersection of interesting business models or business technology, things like data -- big data i call max. , for a willingness to just think super big, with risk as not a variable, elon. >> what do they call you for? >> laughs. [laughter] >> i have heard you are funny. >> occasionally. i don't know. other people are funnier.
a view of the valley. i'm thinking about x, who were the right people to talk to about x? >> you were instrumental in the sale of ebay. -- sale to ebay for $1.5 billion. looking back, was it the right decision? ebay and paypal have had an interesting year. some other members of the paypal mafia think they are better apart. >> it was absolutely the right decision at the time. we made it collaboratively. part of the reason was to really get to the right level of mass of the payments transaction system, it required a much closer connection with ebay. now that it has gotten to a certain level, you can say, look is it better or inside or , outside? one could make good arguments both ways. the argument with is for example, there is still a lot of density of value between ebay and paypal. on the other hand, the argument against it is to say maybe paypal should be like a bank. ebay is not a bank holding company. the natural evolution is too had head best to head -- is to there.
>> after you sold paypal, you could have retired a few times over probably. other members of the paypal mafia bought fancy cars. you bought an acura, which is still a very nice car, but you didn't say i'm just going to lean back. >> a funny story on the car. i was taking about buying an audi s8. it's a really nice car. i got pitched by a friend of mine on a startup. would i rather buy this car or invest in the startup? what is the cheapest nice car i could buy, because i would rather spend my money investing in these companies. so, i bought an acura. >> then you decided to buy -- to start something new. >> i was thinking about taking the euro. i was -- the year off. i was planning to travel.
in 2002, silicon valley concluded the internet was over. i said, no, it's just beginning. the current companies are great. but they are only going to be some of the great companies created. as opposed to a year i took two , weeks in australia, said what is my best idea, and said linkedin is still a valid idea. i should start that. i started investing in companies like facebook and flickr, and a number of others. i said let's go all in. >> the early years were hard. tell me about that. >> i don't know how many viewers will remember this, but friendster was all the rage. >> i remember your >> -- i remember friendster. >> i would say, this is what linkedin is. >> did you come close to giving up? >> never.
>> it took five years to turn a profit and you made some really hard decisions along the way, including stepping down as ceo and becoming executive chairman. >> the question wasn't is it a difficult thing for ego stepping down. the question was what gives us the best possible chance to realize something. part of what i've come to realize is that i'm passionate about scale, impact in the world, solving product and business problems, about entrepreneurship, innovation. but i'm not passionate about running an organization. when we are on boarding the next 100 people, how do we do that in a good way? i know it's important, but it's not the problem that i wake up thinking about. as it came together with jeff, jeff said i can help you interim, running the stuff that you feel challenged about. jeff is enough of a product guy, he could do this job. >> tell me about your
partnership with jeff. >> we get along very well. he knows that when it comes down to things like building organizational cultures, or thinking about how do you really make an executive staff work really well together and how do you identify a-plus talent. we partner on these things together. we solve these problems together. >>'s your time between linkedin your time slplit between linkedin and greylock. is it like 50/50? can you break it down? >> it's 70-70. i work seven days a week. >> seven days a week? >> yes. >> you have had so many wins already. why do you do all of this? >> way i think about it is, how do you have a life that you are proud about having lived? that you think that what you did in the world was worth it? you think -- >> you think about
steve jobs at apple, mark zuckerberg at facebook, larry and sergei at google. is there a magic that the founder brings that would be lost if you weren't here? >> i think so. every founder is useful. that commitment, that willingness to take bold risks. >> you joined greylock as a partner in 2009. you have a unique investment philosophy. the best companies to invest in are the ones you don't agree on. >> most people think that venture partnership works when everyone says yes, this is a good deal, then that is a deal that happens. the best deals are when everyone votes for the deal. the really bold deals that transform industries are the ones that initially seem a little crazy. a little out there. and not quite right, like linkedin in its early days. they end up growing to something that is great. >> didn't you guys disagree on facebook and airbnb? >> yes, a partner who is not to be named said this is going to be the death of greylock. with airbnb, a variety of the partners said -- people are
really going to rent out the rooms? isn't that going to be weird? we had an argument. he said, fine. i wouldn't do the deal, but you can. obviously, airbnb is doing great. >> you have been called the startup whisperer. what does that involve? [laughter] >> i'm not quite sure. i guess with people who use that term, i don't identify myself that way -- by being an entrepreneur myself, by being a participant in a lot of their early stage companies -- it's not that i know everything. i know some things that are useful. >> we live in an age of four increasingly powerful platforms. apple, google, facebook, and amazon. do you worry at all that anyone one of them- any could become too powerful? >> yes. not specifically one of them, but more as a general system. when you have a navigation of platforms, you have to worry about leaving room for entrepreneurs, about leaving
room for innovation. i worry about that on a general basis. not on those specific four companies. i have talked to all of the ceos of those companies. they are all trying to build great products and do great things. >> richard branson has a private island. steve ballmer is buying a sports team. mark benioff gives a lot away. what do you do? with all of the money you have made? >> most of it is still in linkedin stock. because i am building the world with linkedin. i serve on a number of different nonprofit boards. and kiva and endeavor dosomething. i try to finance projects that i think are interesting. >> are we going to see you start something else? another company? >> probably not. founders,s a and seed i work pretty closely with them, but there is a long way to go with linkedin. i would say that is unlikely. although you will see me partnering with a bunch of great young entrepreneurs, and trying to help figure out how to build
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